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Alaska's rural pot market could be grounded before it even takes off

  • Author: Laurel Andrews
  • Updated: September 28, 2016
  • Published April 21, 2016

On the western coast of Alaska, more than 500 miles northwest of Anchorage, Robin Thomas hopes to start the first legal commercial marijuana grow in the famed gold rush city of Nome.

A fisherman by trade, Thomas is looking for a "retirement job" that is less dangerous and less physically demanding than crabbing. He wants something a little easier, something that offers year-round employment.

Enter marijuana.

Thomas has been waiting for legalization for decades. "It finally happened," he said.

He's figured out the basics of his grow operation. He's tallied up investment costs and has designed his own blueprints. He's put in his required public notice to the roughly 3,000 residents of the city. He's even got his own strain of medicinal marijuana.

But Thomas still isn't sure what he'll do about a key requirement in Alaska law: getting his marijuana tested in a state-licensed facility.

Like many other Alaska communities, Nome is off the road system, accessible only by boat or airplane. There likely won't be any testing facilities anywhere near Thomas, meaning he'll need to get small samples of marijuana hundreds of miles away, likely to an urban center.

Whether by mail, airplane, or boat, Thomas will be taking a risk -- one of many for those hoping to break into the commercial marijuana industry -- by shipping cannabis and violating federal law, just to get his marijuana to a testing facility.

He isn't worried. The state has to devise something, Thomas said, and "I plan to go along with whatever they come up with it."

He might be waiting a long time. The state is offering no solutions, for now.

"The state has no control over it. That's really the bottom line," said Marijuana Control Board Chair Bruce Schulte.

Businesses back away

Under state law, all of Alaska's commercial marijuana crops must be tested for three things: potency; certain bacteria and fungi; and residual solvents, such as butane.

To accomplish this, the state is licensing testing facilities. Only three have applied so far, alongside hundreds of applications for grows, manufacturers and retail stores. Two labs are applying in Anchorage, and one in Wasilla. The costs and requirements are steep, running into the hundreds of thousands of dollars for the necessary equipment, said CannTest Inc. CEO Mark Malagodi.

There's a growing expectation that testing facilities will not be present in small, rural towns. "Even for communities on the road system, labs will struggle to be profitable," Schulte said.

Alaska businesses are explicitly allowed, under state rules, to ship marijuana to each other. But there's no mention of how exactly that transport should be accomplished.

"It's not really any of the board's business," said Alcohol and Marijuana Control Office director Cynthia Franklin.

So in Nome, Thomas faces a tough choice. Mailing marijuana is illegal, even as multiple reports say that mailing pot through the U.S. Postal Service has spiked since states began legalizing cannabis. Pilots could lose their license if they are found knowingly carrying marijuana, according to federal laws -- and Thomas says a private carrier would be too expensive, anyway.

For travel across federal water, like that separating Southeast Alaska towns, the Coast Guard "is not turning a blind eye to the federal marijuana laws," said Lt. Aaron Renschler?. That means anyone caught transporting marijuana could, potentially, face repercussions, or have their marijuana confiscated.

In light of federal laws, Alaska businesses back away from endorsing any type of marijuana transport.

Michael Wien, Ravn Alaska's vice president of marketing, and Alaska Seaplanes general manager Carl Ramseth both agreed that marijuana is not allowed on their planes. "If we see something, we say something," Wien said.

Alaska Airlines declined to answer whether people are allowed to carry marijuana aboard an in-state flight. Spokesperson Ann Zaninovich wrote only that, "We are currently evaluating our policy."

[READ MORE: CAN I CARRY MARIJUANA ON AN AIRPLANE IN ALASKA?]

The Alaska Marine Highway System, which operates the Southeast ferries popular with tourists, offers a slightly different official stance. Spokesperson Jeremy Woodrow said that the ferry is only reporting those carrying more than 1 ounce of marijuana -- the amount people can legally carry in the state.

While the ferry "isn't actively seeking people who are violating federal law," Woodrow noted that consumption and possession between states is illegal.

'The whole thing is illegal'

Franklin says people are getting "wound up" on one aspect of an industry already fraught with federal and state conflict.

"Everything we're doing is illegal at the federal level," said Franklin of Alaska's marijuana legalization.

Alaska isn't the only state struggling with this aspect of cannabis businesses. In Hawaii, lawmakers are grappling with the same issue of shipping medical marijuana across federal waters.

States have relied on the oft-cited Cole Memo for guidance in avoiding federal prosecution. Alaska has tried to cover its bases to keep in line with Department of Justice priorities, like avoiding marijuana access for minors, and preventing inter-state transport.

Federal agencies report back to the U.S. District Attorney's Office, which decides whether or not to prosecute.

"That's all you can do, is say: 'Are (federal prosecutors) interested in this?' " Franklin said of transporting marijuana in-state. She noted that at the airport in Portland, Oregon -- where voters approved recreational marijuana at the same time as Alaska -- people are permitted to carry marijuana for in-state travel, and those airlines have yet to face repercussions.

Marijuana attorney Jana Weltzin took issue with the idea that the state has no ability to modify federal regulations and help businesses achieve their transportation needs. The state could have written the regulations in a way that allowed for in-house testing of products, Weltzin said, or allowing for "more economically feasible" testing requirements so that more labs would open their doors.

To this end, MCB Chair Schulte had tried to add a provision that would relax laws for rural areas during an autumn board meeting, but the Department of Law stripped the language from the state's rules, saying it was too arbitrary.

With a cargo manifest required along each journey, businesses are essentially incriminating themselves every time they travel with marijuana, Weltzin said. That adds another potential criminal charge, and another potential risk. "It's unfortunate that … rural communities are going to be even more at risk" Weltzin said.

Franklin disagreed. "I do not think that the testing requirements favor the urban area … Everything is harder in rural Alaska."

Franklin and Weltzin agree that massive risks are inherent to the industry.

"Here's what I tell people: 'If you're worried about being prosecuted by the feds and that worry keeps you up at night … then this industry isn't for you right now,' " Weltzin said.

Snowmachines, mobile testing, mailing?

Businesses are eyeing a few different solutions to the testing conundrum, but there's no clear way forward.

Mailing marijuana, in one sense, is "an ideal way" to transport it, said Malagodi of CannTest.

"The question is: Do you want to take the risk and do it that way?" he said.

The risk is on him, too: Malagodi said he could be facing inquiries from the post office, as he could potentially be sitting on multiple packages of mailed cannabis.

Meanwhile, the Ketchikan Gateway Borough is trying to get ahead of the issue by creating rules that would ban the mailing or transport of marijuana on a commercial carrier, whether by air or sea, if it violates federal law. The borough Assembly will take up the consideration in June, according to planning director Chris French.

At a mid-April meeting in Ketchikan, the marijuana advisory board discussed mobile testing labs as a possible solution for rural areas. Malagodi disagreed, saying that the equipment required for a lab wouldn't be very portable.

Snowmachines and ATVs seem like the most viable option for transporting marijuana from rural communities for Larry Clark, owner of Valkyrie Security and Asset Protection Inc., which hopes to work specifically with cannabis businesses.

The security and transportation company said it has ruled out all air transport of marijuana, having been told "in no uncertain terms" by the FAA that the pilot's license would be jeopardy, Clark said.

While the use of alternative vehicles is being considered, it's not a sure thing.

"The logistics of it are a huge undertaking," Clark said.

Out-of-state labs have dealt with some of the same issues. In Oregon, cannabis testing facility Green Leaf Lab has focused its transport only on ground courier.

"We don't accept cannabis in the mail … I just don't feel comfortable or safe with that," said Green Leaf owner Rowshan Reordan.

In Massachusetts, island communities trying to set up medical marijuana dispensaries are struggling with transporting over federal waters, said Chris Hudalla, owner of testing lab ProVerde.

Some customers have sent samples through the U.S. Postal Service "and we've never received them," Hudalla said.

"Lo and behold, a day later they get a little postcard from the Postal Service," asking them to come to the post office to answer questions about a package, Hudalla said.

Nome cultivator Thomas, at least, has a backup plan if he can't get a satisfactory answer on the transportation conundrum: if he can't find a good way to get his product tested, he says he plans to just store the excess in his warehouse until a solution is found.

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